Surging food prices have driven inflation to 4.4 per cent, a level not seen since the recession year of 1991, more than double the Bank of England’s two per cent target and up sharply from 3.8 per cent over the year to June.

Prices as measured by the official Consumer Prices Index stood unchanged overall between June and July, but stood against a temporary dip in July last year, which benefited from a brief shake-out in the cost of crude oil.

The cost of food generally has now risen by 13.7 per cent over the past 12 months, more than at any time since July, 1980. This compares with a 10.6 per cent increase in June and 5.9 per cent as recently as March.

The price of meat shot up by 2.8 per cent between June and July and now stands 16.3 per cent higher year on year.

Milk, cheese and eggs, taken together have gone up by 29.5 per cent and bread and cereals by 13.7 per cent.

A National Farmers’ Union economist Richard George blamed this year’s leap in the price of oil and its impact on what farmers pay for feed, fertiliser and fuel.

“Farmers are seeing a relentless pressure on key items which are either fuel or fuel-linked” he said. “That remains the biggest issue and its takes some time for these factors to make their way through the system. We are still half-way through the process.”

The long-running Retail Prices Index, the benchmark for the state pension and many other benefits, has now touched five per cent, up from 4.6 per cent in June.

Any further increase will squeeze the buying power of many company pension schemes which raise their pay-outs in line with the RPI – but with a limit of five per cent.

Economists warned of the consequences for interest rates as the pound fell below $1.90 for the first time for more than a year amid fears about a weakening British economy.

“A perilously weak economy has prevented the (Bank of England’s interest-setting) committee from raising rates, but inflation is likely to prevent rate cuts before early next year,” said Philip Shaw at Investec.

George Buckley, a Deutsche Bank economist, said Britain is already in recession, but with inflation rising like this there is little the Bank can do about it.

Vicky Redwood of Capital Economics said: “While we still think the MPC could cut rates before the end of the year, a cut within the next couple of months looks well off the agenda – a message likely to be reinforced in tomorrow’s ‘Inflation Report’.

“Indeed, a rate rise is still a possibility.”

Hetal Mehta, economic adviser to the Ernst & Young ITEM Club, commented: “The price of oil has fallen significantly over the past few weeks and the cost of petrol has been lowered.

“However, that does not mean that inflation has peaked. Gas and electricity bills are set to increase and producers are still facing high input costs which could be passed on to retailers and in turn on to consumers.

“We expect inflation to remain above the two per cent target well into next year. And until inflation does peak, the Bank of England will be unable to cut interest rates, despite the rapid economic slowdown currently in train.”

Howard Archer at Global Insight described the numbers as “really disturbing”.

But he added: “Very weak economic activity should increasingly contain and then dilute the underlying inflationary pressures.